From Your Financial Assistant

GST and the Impact on Consumers

While the Goods & Services Tax is a transformational structural reform which will have multiple benefits, there is the usual chaos when there is a major change from the existing systems. Here is a small example which makes GST extremely simple to understand for everyone.

The long-term benefits of the creation of a national market; enhanced ease of doing business; greater productivity & efficiency; and improved tax compliance are totally worthwhile to go for.

As consumers we need to understand that the Goods and Services Tax (GST) is an indirect tax, that is, it is a tax levied on the consumption of goods and items, versus a direct tax that is levied on income.

The advantage is that it replaces all the central and state taxes, such as excise duty, service tax, sales tax, with a single tax structure. While in principle GST is meant to be a single tax, in India it’s actually a dual tax – Central GST and State GST and then there’s Integrated GST on the inter-state supply of goods and services.

We, as consumers, are worried about the impact of GST on our monthly budgets and other expenses.

Here’s wishing that all stakeholders work together for a seamless transition to this new paradigm. This reform will result in benefits for all participants in the Indian economy, including both businesses & consumers.

Read more about GST here which talks about how GST rates in telecom and cinema was a pleasant surprise for consumers.